New Source for Leads

Where do you go to find buyer leads.  Sellers are announcing themselves all over the place but buyers seem to fly under the radar.  But I've been discovering the secret hiding places of some of these potential buyers...

Construction Companies...quite often these companies have people who want to build a home and are looking for the right piece of ground to build on.  The right construction company may be a source of many lot purchase leads.

Sub Contractors...everybody knows somebody who wants to buy or sell real property and if you have a good relationship with the sub contractors they can lead you to many prospects.  This is especially true when the prospect wants to build a home and the sub contractor will get the opportunity to do their trade in the project.

Construction Lenders...obviously these people know who's applying to build a home.  Most of the time these people already have a lot, a house plan and a builder for their home.  But there are a few instances when people will actually start the process with the lender.

Remodelers...what about the person who gets a remodel bid and it is just more than their budget will allow?  Quite frequently the answer to this dilemma is to buy a different house and sell the one they are in.  2 leads instead of one.  And the contractor already has the bids for the work to be done if the property was to be purchased as an investment (and later resold with a listing agreement).

The Actual Project...if you're working on a project that needs work, maybe the best source of buyers are the contractors and sub-contractors who would be working on the project.  These people will make the money for the work they would have done anyway and they make the additional profit by enhancing the property value.  Then they need to sell the property (which means listing agreement) and attracting new potential buyers and investors.

I've discovered that the local Home Builder's Association is a great source of leads for an investing realtor.  They know their work, they get paid for it, may be the buyer/investor, and a listing source in the future!  It's time to develop a working relationship with the local contractors.  You will provide them additional work and they will be/produce buyers and sellers.  What a win-win opportunity.

The First Step

"I learned later that every successful enterprise, great or small, begins with a leap of faith, a driving into the dark, into the unknown.  Nature is kind to us in that she never lets us see to far ahead.  If we really knew all the difficulties, disappointments, temporary failures, and heartaches we would experience, most of us would not start out at all.  This applies to new businesses, careers, marriage, having children--and almost every other human endeavor."

(Brian Tracy, "Success is a Journey", p. 24)

Don't Quit

When things go wrong, as they sometimes will,

When the road you're trudging seems all uphill,

When funds are low and the debts are high,

And you want to smile, but you have to sigh,

When care is pressing you down a bit,

Rest, if you must, but don't you quit.

Life is queer with its twists and turns,

As every one of us sometimes learns,

And many a failure turns about,

When he might have won had he stuck it out;

Don't give up though the pace seems slow,

You may succeed with another blow.

Success is failure turned inside out,

The silver tint of the clouds of doubt,

And you never can tell how close you are,

It may be near when it seems so far;

So stick to the fight when you're hardest hit,

It's when things seem worst that you must not quit

--Author Unknown

Make a Decision

Most people seem to make a big deal out of making a decision.  But this is a bad sign of their ability to progress through life.  Making decisions should be as natural as breathing (according to Charlie "Tremendous" Jones).  Our job in life is not to make decisions, that should come naturally.  Our job is to make our decisions right.

We are never going to be in a position to have all the facts and all the information to make the "right" decision.  So we need to take the all the information that we can get and make the best decision we can.  Once the decision is made we need to work to make that decision the right one.  And we can only learn for ourselves, through our decisions and the resulting consequences.  So we need to make it a habit to make decisions and then make them right.

Knowledge is Power

I'm working on a small 4-unit condo conversion and right now I'm collecting the information for my deal binder (all the bids and numbers, zoning ordinances, and other important information regarding the project.  In talking about this project with a potential contractor I suggested he talk with the city about the conversion to make sure that the work he is bidding is the work required by the city for the conversion.

The next day I get a call from this contractor who is concerned about the work above what I asked him to bid (he was bidding the firewall only but discovered that we need a survey, plat map, cc&rs, hoa declaration, etc. and we had to go through the planning commission and city council for approval).  I already knew these things are have bid that work.  BUT...he was also told that a new change in the building code required a pressurized sprinkler system through out the building!  So he started bidding that work as well.  This is where a little knowledge pays big!

I went in to talk with the chief building official (don't talk to the inspectors, talk to the person with the final word) about getting an inspection to make sure I've accounted for all the important changes.  In that discussion I asked him about the sprinkler requirement.  He told me the same thing he told my (potential) contractor.  However, having already had this discussion with him I had him pull out the building code and show me the definitions.  Amazingly, I was right...a town home has 2 sides exposed with no one living above or beneath!  As a town home the property falls into a different category and does NOT require a sprinkler system.  He couldn't believe it (even though we had discussed this a couple weeks ago) and had to double check with the other code book.  A few minutes later he emerges and verifies that I was indeed correct.  So in my pre-inspection he is going to discuss the "new" discovery with the inspector to make sure that he is aware of this vital point as well.  

That little bit of knowledge is going to save me thousands of dollars in upgrades and cost to change.  In fact, it is probably the difference between a successful project and not doing the deal.  In this case knowledge really is power (and a lot of money!).

Seasoned LLCs - A Great Place For Investment Equity!

For people with an unstoppable vision and desire anything is possible. And it is just a matter of time before the way will present itself. One of my friends just started a business brokering seasoned LLCs. Why is there even a market for seasoned LLCs? Because an established business can acquire financing that new business cannot. What does that mean?
A new business has no track record and the lending industy isn't very excited to take a chance on a business that is just trying to figure things out. But the same business, in 2-3 years down the raod is no longer "new." That means they have worked through the initial start-up problems and have survived so now they are worth taking a chance on (less risk). These companies can usually get SBA loans and Business Lines of Credit around $40-50K and very reasonable rates. (Keep in mind this is intended to be business debt, not commercial spending money.)
A saavy investor can purchase any number of seasoned LLCs and each LLC can get it's own line of credit up to $50,000. If they invest it with a company like ours they can take 2 LLCs ($100,000) and invest for 2 points, 12 % and 5% of the net profits. That means they can get $2,000 (for points), $12,000 (for interest for the year), and $5,000 (of the net profits) or something is the range of $17,000 return on the investment. If it costs 7% to borrow the money (or $7,000) and you make $17,000 then you have made an extra $10,000 for the year! Not bad considering that none of the invested money was actually your in the first place. And just about any one can qualify for this type of investing if they have better than average credit (680 FICO score or better).
I've been excited about this idea for a couple months now, ever since I learned about the power of seasoned LLCs. But it wasn't until this week that I discovered a consistent source of seasoned LLCs that could be purchased at will. This can be a powerful resource for investment capital for my real estate projects (based on our Foundation to Success criteria).
Consider...if each client had just one seasoned LLC with $50,000 in available credit...how many projects could be purchased? What if we combined this concept with the Equity Builder Program? Each tenant works to improve their credit to be able to purchase their own home. Once their credit is good enough to buy a home they would also be in a position to become an investing client using a seasoned LLC! If they added an additional $10,000/year in investment income, that gets pretty close to paying a reasonable mortgage payment...so once their credit is good enough they can start investing and the investments would pay for the house they just bought! And it would provide a new source for $100K investment capital on a regular basis!

The Ant Philosophy

Jim Rohn gave the following:

"Over the years I taught children about a simple but powerful concept - the ant philosophy. I think everybody should study ants. They have an amazing four-part philosophy, and here is the first part: ants never quit. That's a good philosophy. If they're headed somewhere and you try to stop them; they'll look for another way. They'll climb over, they'll climb under, and they'll climb around. They keep looking for another way. What a neat philosophy, to never quit looking for a way to get where you're supposed to go.
Second, ants think winter all summer. That's an important perspective. You can't be so naive as to think summer will last forever. So ants are gathering in their winter food in the middle of summer.
An ancient story says, "Don't build your house on the sand in the summer." Why do we need that advice? Because it is important to be realistic. In the summer, you've got to think storm. You've got to think rocks as you enjoy the sand and sun. Think ahead.
The third part of the ant philosophy is that ants think summer all winter. That is so important. During the winter, ants remind themselves, "This won't last long; we'll soon be out of here." And the first warm day, the ants are out. If it turns cold again, they'll dive back down, but then they come out the first warm day. They can't wait to get out.
And here's the last part of the ant philosophy. How much will an ant gather during the summer to prepare for the winter? All he possibly can. What an incredible philosophy, the "all-you-possibly-can" philosophy.
Wow, what a great seminar to attend - the ant seminar. Never give up, look ahead, stay positive and do all you can."

What a great philosophy. I think we all need to think a little more like ants.